| You've decided to buy a new car. The natural question | | | | for $10,000 plus $900 (your tax savings) to equal what |
| is what to do with your current car. You've got a | | | | your dealer was going to give you. That's a pretty high |
| couple options, so you need to understand the relative | | | | hurdle. |
| value of selling a used car versus trading it in when | | | | But that's really only one consideration. |
| you buy. | | | | The other big thing to consider is the hassle of selling |
| The good news is that understanding the trade-in math | | | | on your own, or to look at the other side of the coin, |
| can help put a nice chunk of change in your pocket. | | | | the convenience of letting your dealer handle the entire |
| The bad news is that the math is not quite as | | | | transaction. |
| straightforward as you might think. | | | | If you sell on your own, you have to advertise the |
| Let's say you have a car that you can sell for privately | | | | vehicle and try to market it in your area. Do you know |
| for $5,000. And let's say you're in the market for a | | | | the right price to charge? What sells where you are, |
| $25,000 new car. Should you sell your car yourself, or | | | | and what does not? You'll also have to show it to |
| should you trade it in when you buy the new one? | | | | interested parties, wait while people let their mechanic |
| You might put more cash in your pocket by selling it | | | | look at it, and so on. You'll have to handle all of the |
| yourself, but your net gain on the sale might be lower | | | | paperwork yourself, transfer the title appropriately and |
| than if you traded it in. That might sound strange, but | | | | meet any requirements your state has for people who |
| it's really not. The missing piece of the puzzle is the | | | | sell vehicles. |
| impact of sales tax. | | | | If you trade in your car, you're pretty much selling your |
| When you buy a new car, you have to pay sales tax | | | | car to the dealer. He does all the paperwork, and he's |
| only on the difference between the purchase price of | | | | very likely to offer you more for the car than you'd get |
| the car and the trade-in amount. | | | | from a private buyer. You could have the entire |
| So if you can find a dealer who will give you $10,000 | | | | transaction done the day you buy your new car, and |
| for your trade-in (and he very well might in order to | | | | never have to deal with another headache. |
| move a car off of his lot), you'll owe tax on $15,000. If | | | | Selling your own used car and trading it in are both |
| the tax rate is six percent, that's $900. Consider that | | | | good strategies, and you can make out pretty well |
| savings when you're deciding whether to sell your | | | | with either. But before jump into the seller pool, |
| used car on your own. | | | | consider very carefully whether it's worth the bother, |
| If you sold your car on your own, you'd have to sell it | | | | or whether trading will net you more money. |